Opinion
No. 56404-8-I.
July 3, 2006.
Appeal from a judgment of the Superior Court for King County, No. 03-2-40223-1, Anthony P. Wartnik, J., entered June 10, 2004.
Counsel for Appellant/Cross-Respondent, Bradley Alexander Evens, Bucklin Evens PLLC, 7525 SE 24th St Ste 500, Mercer Island, WA 98040-2334.
David Adam Herrman, Bucklin Evens PLLC, 7525 SE 24th St Ste 500, Mercer Island, WA 98040-2334.
Kenneth Wendell Masters, Wiggins Masters PLLC, 241 Madison Ave N, Bainbridge Island, WA 98110-1811.
Counsel for Respondent/Cross-Appellant, Paul Renwick Taylor, Attorney at Law, 1000 2nd Ave Ste 3800, Seattle, WA 98104-3617.
William Harrison Walsh, Byrnes Keller, 1000 2nd Ave Fl 38, Seattle, WA 98104-1094.
Affirmed by unpublished opinion per Becker, J., concurred in by Baker and Dwyer, JJ.
In this failed real estate transaction, buyer Kauri Investments refused to fund the purchase at closing. Kauri believed its performance was excused because seller General Insurance Company did not convey parking rights along with the building. Kauri contends the trial court erred in refusing to order specific performance of the purchase and sale agreement that would include a parking guarantee or equivalent cash value. The parking covenant on which Kauri's argument is based is too nebulous to support such a remedy. Kauri's request for return of the earnest money is unsupported in the record. We affirm.
FACTS
For the time relevant to this appeal, General Insurance Company of America owned the Collegiana, a dormitory style building in Seattle's University District that was permitted for use as a hotel. Originally, the Collegiana had on-site parking. In 1984, General planned to remove the on-site parking in connection with a major remodel of the Collegiana. A zoning ordinance required provision to be made for accessory parking:
evidence shall be provided that a covenant has been filed providing that the area used or to be used for parking accessory to the principal building located elsewhere shall be diverted or converted to no other use as long as the principal building to which the parking is accessory shall continue to exist.
Exhibit 1 (Covenant) (quoting sec. 21.22(7) of the Zoning Ordinance (86300) of the City of Seattle).
The City demanded nine parking stalls. To satisfy the zoning requirement and obtain building and use permits for the remodel, General agreed to provide space in a parking garage next door, also owned by General. The agreement was in the form of a covenant signed by General as `First Party — Owner of Accessory Parking Site' and `Second Party — Owner or occupant of Principal Building Site'. In section one, General promised to dedicate nine spaces for Collegiana parking for a term of five years:
The first party and second party agree that the Accessory Parking Site may be used as a required off-street parking facility accessory to a building occupied by second party for a total of 9 parking spaces, for a period of five (5) years, terminating on October 31, 1989. The first party shall have the right to substitute an equivalent parking facility, which shall qualify as `Accessory Parking' under the zoning code, during the term of this agreement.
General promised in section three to provide other off-street parking after the five year term:
The second party hereby covenants and agrees that upon termination of this agreement other off-street parking space will be provided to replace the required spaces of the Accessory Parking Site, or the use on the Principal Building Site which requires such spaces will be terminated.
In sections four and five, General promised to notify the City if the status quo changed:
The first party and the second party hereby covenant and agree that they shall notify the Director of the Department of Construction and Land Use immediately if this agreement for the Accessory Parking Site is to be terminated for any reason, and/or the Accessory Parking Site is to be diverted or converted to any use other than off-street parking accessory to the Principal Building Site.
The second party hereby covenants and agrees that if the Accessory Parking Site is to be diverted or converted to any use other than off-street parking, he shall immediately notify the Director of the Department of Construction and Land Use of his intention to provide other parking, seek a variance, or terminate the use, and if he intends to continue the use to obtain all necessary permits to establish parking in a timely manner.
In August 2003, General agreed to sell the Collegiana to Kauri Investments for $1.9 million. By the terms of the purchase and sale agreement, Kauri agreed to purchase all of General's `right, title and interest in' the property. The property included the `Land,' i.e., the real property `together with all easements, rights of ways, privileges, licenses, and appurtenances which Seller may now own or hereafter acquire with respect to such real property.' The property included all `rights and appurtenances, if any, pertaining to the Land' and any intangible property `that pertains exclusively to the Land or the Improvements'.
The purchase and sale agreement contained disclaimers. In one disclaimer, Kauri acknowledged that — except as set forth in the conveyance documents — General was making no representations or warranties with respect to the Collegiana's `compliance with applicable laws or its compliance with covenants, conditions and restrictions.'
The purchase and sale agreement provided for a 14 day contingency period. During this period Kauri could decide, in its sole discretion, whether the property was satisfactory. By the end of the contingency period, if Kauri notified General of an intention to go forward with the deal, the $100,000 earnest money would become nonrefundable absent default by General.
Otherwise, Kauri could terminate the agreement and receive an earnest money refund.
Before entering into the purchase and sale agreement, Kauri repeatedly heard that the sale did not include parking rights. General's agent told Kauri there was no parking included. An appraisal Kauri had been given indicated there was no parking for the property. Kauri's own agent explained that, to the extent parking was available, it would be at market rates on a month-to-month basis.
During the due diligence period Kauri discovered the 1984 parking covenant and viewed it as an appurtenant interest. Before the due diligence period ended, Kauri told General: `Currently the purchase and sale agreement does not address the parking requirement. So we will need to resolve this issue.' General responded that the parking covenant `was not a matter of fact known or contemplated by either party at the time the subject Purchase and Sale Agreement was negotiated or signed, nor was it a matter that was reflected of record or in the earlier title commitment obtained by Seller'. General claimed it had the right to terminate the covenant at or before closing, and warned Kauri to `keep this fact in mind when electing to make its contingency and title decisions.' Kauri responded that the covenant was part of the land being purchased and requested a copy of the document General would provide at closing to transfer General's interest in accessory parking to Kauri. `Alternatively, we wish to review the instrument or document which provides replacement accessory parking'. The contingency period ended without any resolution of Kauri's claim that the interest to be conveyed by General included accessory parking. General eventually obtained a commitment for off-street parking at various nearby University District Parking Associates lots. These alternative parking spaces were farther away from the Collegiana than the original parking garage, they were neither covered nor secured, and their use would have to be paid for. Closing was scheduled for 10:00 a.m. on October 3, 2003. Two weeks before closing, General informed Kauri that `the City was on board' with the proposed replacement parking.
Finding of fact 17.
Finding of fact 18.
Finding of fact 18.
Finding of fact 20.
Finding of fact 22.
The conveyance documents were to include the originals or copies `of all of the contracts, if any, affecting the Property' and any other documents `required to fulfill the covenants and obligations to be performed by Seller pursuant to this Agreement.' At closing General delivered conveyance documents. One document showed that General had recently terminated the 1984 parking covenant. Another document showed that University District Parking Associates had agreed that nine dedicated parking spaces could be used as required off-street parking for the Collegiana through October 2008. The agreement was in the form of a covenant signed by University District Parking Associates as `Owner of Accessory Parking Site' and General as `Owner or Occupant of Principal Building Site'. Kauri refused to fund the transaction, and the transaction did not close.
Kauri sued General for breach of contract. Kauri's theory was that the documents proffered into escrow by General changed the deal materially by substituting a new parking covenant in place of the one that Kauri viewed as creating a valuable interest appurtenant to the Collegiana. Kauri asked the court to order specific performance of the purchase and sale agreement:
General should either include a parking guarantee equivalent to the nine spaces, or offset the purchase price with the value of what Kauri would have to pay for the replacement parking. Kauri estimated the value of the parking covenant at approximately $300,000.
General's position was that the 1984 parking covenant had actually terminated in 1989 by its own terms. A former on-site manager of the Collegiana testified that guests had not been allowed to park in the garage since the early 1990s. Instead, they were referred to off-street parking lots. Kauri responded that General did not terminate the covenant until after the parties had entered into the purchase and sale agreement, and therefore breached by terminating the covenant without Kauri's permission. The trial court rejected Kauri's request for specific performance:
Report of Proceedings (5/3/2005) at 119.
Report of Proceedings (5/2/2005) at 78-79.
Kauri materially breached the PSA, which bars it from seeking specific performance. Even if Kauri had not breached, there was no agreement between the parties as to parking, or the specific terms of parking, that is susceptible to specific performance.
Conclusion of law 3.
The court awarded attorney fees to General as provided for in the purchase and sale agreement. Kauri appeals.
Preliminarily, Kauri challenges several findings of fact. It is unnecessary to discuss Kauri's complaints about the findings because they do not go to the central issue in the case. The central issue is whether the trial court should have decreed specific performance of the purchase and sale agreement in some manner that would allow Kauri to derive a financial benefit from the existence of the 1984 parking covenant.
Specific performance requires clear and unequivocal evidence that leaves no doubt as to the terms, character and existence of the contract. Russell v. Cook, 78 Wn. App. 427, 433, 896 P.2d 1317 (1995). Specific performance is not a matter of right in equity. It rests in the sound discretion of the trial court. Hallauer v. Certain, 19 Wn. App. 372, 379, 575 P.2d 732 (1978). The denial of an equitable remedy is reviewed for abuse of discretion. SAC Downtown Ltd. P'ship v. Kahn (In re Foreclosure of Liens), 123 Wn.2d 197, 204, 867 P.2d 605 (1994).
The trial court found that even after the covenant expired, General had a continuing obligation to provide replacement off-street parking. But the agreement was not susceptible to being enforced as though it included parking, or a parking equivalent, because the evidence was unclear as to the terms of what that continuing obligation might consist of. Kauri contends the covenant obligated General to provide the Collegiana with nine free parking spaces indefinitely. But the parking covenant does not set out where the accessory parking must be located; does not specify whether or how much users can be charged; and does not make clear whether the spaces must be available at all hours, or only at certain times. Any continuing obligation General had to arrange parking for Collegiana guests was too unclear in its terms to support a decree of specific performance or an offset in price. The obvious intent of the 1984 covenant was to satisfy the City that the Collegiana would have accessory parking so that guests would not have to rely exclusively on street parking. That objective was accomplished by the documents General put into escrow. It is not possible to interpret the parking covenant as requiring anything more. The trial court, while aware that specific performance is an appropriate remedy in some circumstances, did not abuse its discretion in refusing to order that remedy in this case.
Finding of fact 15.
Kauri finally contends that even if specific performance was inappropriate, we should set aside the transaction and order the return of Kauri's earnest money. But the only remedy Kauri sought below was specific performance. The remedy Kauri seeks on appeal is not available on this record. The request for an order requiring the return of the earnest money is denied. Because we are not ordering a new trial we need not reach General's cross appeal aimed at the exclusion of certain work product documents offered by General as evidence. As prevailing party, General is entitled to an award of attorney fees on appeal upon compliance with RAP 18.1.
Affirmed.
DWYER and BECKER, JJ., concur.